Correlation Between Cohen and Federated Premier

Can any of the company-specific risk be diversified away by investing in both Cohen and Federated Premier at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Cohen and Federated Premier into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cohen and Steers and Federated Premier Municipal, you can compare the effects of market volatilities on Cohen and Federated Premier and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Cohen with a short position of Federated Premier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cohen and Federated Premier.

Diversification Opportunities for Cohen and Federated Premier

0.75

Correlation Coefficient

Cohen  Federated Premier

Poor diversification

The 3 months correlation between Cohen and Federated is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Cohen and Steers and Federated Premier Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Premier and Cohen is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Cohen and Steers are associated (or correlated) with Federated Premier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Premier has no effect on the direction of Cohen i.e., Cohen and Federated Premier go up and down completely randomly.

Pair Corralation between Cohen and Federated Premier

Considering the 90-day investment horizon Cohen and Steers is expected to generate 0.97 times more return on investment than Federated Premier. However, Cohen and Steers is 1.03 times less risky than Federated Premier. It trades about 0.06 of its potential returns per unit of risk. Federated Premier Municipal is currently generating about 0.02 per unit of risk. If you would invest  1,994  in Cohen and Steers on December 1, 2024 and sell it today you would earn a total of  40.00  from holding Cohen and Steers or generate 2.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Cohen and Steers  vs.  Federated Premier Municipal

Cohen and Steers

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cohen and Steers are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Cohen is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Federated Premier

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Premier Municipal are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy primary indicators, Federated Premier is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Cohen and Federated Premier

The main advantage of trading using opposite Cohen and Federated Premier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cohen position performs unexpectedly, Federated Premier can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Federated Premier will offset losses from the drop in Federated Premier's long position.

The idea behind Cohen and Steers and Federated Premier Municipal pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.